Mortgage lending edges up but remains subdued

Mortgage lending made a surprise recovery in February, increasing by 6% compared to the previous month, according to figures released by the Council of Mortgage Lenders (CML) today. Gross mortgage lending (which ignores loan redemptions) increased to an estimated £9.2bn last month compared to £8.7bn in January, which was the lowest figure in 10 years . The CML said an increase in lending in the shortest month of the year was unusual but unsurprising this year, given that the end of the stamp duty holiday in December distorted lending figures considerably in that month and January. Lending this February was down 6% compared to the same month last year, when borrowers applied for £9.7bn in mortgages, but the CML said the first two months of this year are broadly in line with its forecast for lending £150bn during 2010 as a whole. • FSA chairman: end 100% mortgages • Mortgage arrears cases fall by 4% CML economist Paul Samter said he expected to see signs of improvement as confidence in the economy grows, but he added: "The need for the authorities to address the fiscal deficit will inevitably slow the economy. At the same time the funding markets, while certainly better than a year ago, remain difficult and will limit the flow of available housing finance. "Given the short-term weakness and distortions in the housing market, as well as more properties coming on to the market, it was perhaps unsurprising to see falls in some of the monthly house price indices in February. With activity unlikely to pick up much in the short term we would expect to see continuing price fluctuation in the coming months." Andrew Montlake, director of independent mortgage broker Coreco , agreed that the availability of mortgages was causing problems, and said the forthcoming election could also subdue borrowing: "We are not expecting borrowing levels to accelerate significantly in the run-up to the general election, and they may even fall back slightly post-election. Come the second half of the year we will know far more about how the mortgage and residential property markets are likely to fare in the short term. "While it is considerably easier to get a mortgage than it was a year ago, it is still considerably more difficult – and rightly so – than three years ago. There has been a slight improvement in product availability and rates in the 80%-85% loan-to-value range, although at 90% LTV the market is still very limited."